Electric Vehicles (EVs) are increasing the interdependence of transportation policies and the electricity market. EMMEV (Electricity Market Model with Electric Vehicles) is an experimental agent-based model that analyses how carbon reduction policy in transportation may increase number of Electric Vehicles and how does that would influence on the electricity price. Agents are ESCOs (Energy Service Providers) which can distribute fuels and their objective is to maximize their profit. In this paper, EMMEV is used to analyze the impacts of the LCFS (Low Carbon Fuel Standard), a performance-based policy instrument, on electricity prices and EV sales. The agents in EMMEV/regulated parties in LCFS should meet a certain CI (Carbon Intensity) target for their distributed fuel. In case, they cannot meet the target, they should buy credit to compensate for their shortfall and if they exceed, they can sell their excess. The results, considering the assumptions and limitations of the model, show that the banking strategy of the agents contributing in the LCFS might have negative impact on penetration of EVs, unless there is a regular Credit Clearance to trade credits. It is also shown that the electricity price as result of implementing the LCFS and increasing number of EVs has increased between 2–3 percent depending on banking strategy.